My Own Personal Student Loan Crisis
From Hopeless to Cautiously Hopeful...
Let's talk about student loans.
I know, it's an uplifting topic, right?
Maybe its' not uplifting, but at least it's timely, right?
I don't remember the first time that I heard the term "student debt crisis" on the news or saw it on the internet. I guess because, in my mind,student debt has always been a crisis. At least to me personally.
Like a lot of people my age, I took out loans to attend university. This was way back in 1995, when the college that I attended cost about $22,000 per year, including housing and tuition. My wife, who went to a smaller school around the same time, also took out loans to cover the difference that wasn't covered by scholarships. Her school was about $14,000 per year.
Contrast that cost to what it costs now. All in? The school that I attended has increased about 141%, meaning it costs just under $53,000 per year, and my wife's school costs just under $35,000 per year, an increase of roughly 150% . Just as a point of reference, the average cost for a gallon of milk in 1995 was $2.45, and it's gone up only 40%, to $3.50.
There is nothing in the world that increases at the rate that college tuition does. Even accounting for inflation, The $22,000 that it cost to attend my college in 1995 is only worth about $42,000 now.
And the only way I could afford to go to college, was to go into debt.
I'm not alone, of course. If I was, the Student debt crisis would be something I talk to my financial advisor about, it wouldn't be mentioned on the news or by politicians at all.
So what's my student debt crisis story? I'm sure it's not unique, but I'm going to tell it anyway.
I made two life altering decisions between the age of 20 and 24. The first one, when I was 20, was when I decided to get married. That's a decision I will never regret. Most of the people who get married at that age end up divorced and remarried before they are 30. Me? I'm happy to stay with my wife until we are old and gray. So in the end, it's one of the best decisions I have ever made, if not THE best decision I have ever made.
The second happened in the early half of 2001. Long before 9/11, when the world was a bit more hopeful, I responded to a mailer from Sallie Mae.
If you don't know, Sallie Mae was once a government sponsored entity that both serviced and gave out federally backed loans to students and college graduates. The types of loans that they serviced and loaned out included loans for the Federal Family Education Loan Program, or FFELP. FFELP specialized in a number of loan types, including spousal consolidation loans.
Now, at this point in my life, I had been out of school for almost four years. I had left due to the financial burden of not only paying for my school through tuition, but the increasing cost of film supplies, and the stress of working an insane amount of hours to pay for them. In the time since I left, I had been faithfully paying for my loans, a federally unsubsidized loan as well as a Perkins loan. I had even paid my Perkins Loan off - something that was definitely worth celebrating.
However, my wife had a much larger school bill, even though my school cost a lot more than hers did; because she had actually finished her degree in nursing. The combined cost of both of our loans was not insurmountable, but it was difficult, for a lot of reasons. Most of which was the fact that I had recently left my job due to a misunderstanding with my boss.1
So we were in a bit of a desparate situation. And Sallie Mae was there to take advantage of it.
But how did I end up in this situation in the first place?
I grew up poor. I hesitate to use the term white trash, but that's pretty close to what I was. I grew up in a single-wide trailer with a single parent. We used food stamps and were on medicaid. Most of my clothes were hand-me downs from older cousins. So yeah, I was poor.
I was also highly uneducated when it came to debt. I didn't really know what a loan was, let alone how loans worked. I didn't even know that I was taking out a loan to go to school. Nobody really educated me about it, either.
Interestingly enough, I signed for my loans before I was even 18. I didn't turn 18 until I was actually in college. I guess my mother co-signed for them. I'm not sure how I even got access to that money at that age.
But regardless of how I got the money, I didn't know how the system worked.
That's the important part. I was naive. And I think the Department of Education knew that. And I can't be the only one, right?
This is the predatory nature of student loans. They prey on people with dreams. People who dream of escaping the world that they grew up in, trying to find a better place for themselves. A better future. I was chasing the dream of becoming the next Stephen Spielberg. And I knew I couldn't do that at home.
So I was a victim of my own circumstances. And I didn't have anyone - no adults - telling me how to navigate these obviously dangerous waters.
And those waters didn't end with a federally backed student loan. They led me right into the jaws of the killer shark itself - Sallie Mae.
Sallie Mae promised lower payments, better terms, and - most importantly - only one payment per month instead of three. And that was appealing to me at this point in my life. So was the idea of an interest free deferment until I figured out my employment situation.
So, I signed on the dotted line. And I've regretted it almost ever since.
If you've read my book2, you will know that my employment history was ... let's just say eclectic. I had periods of both unemployment and under-employment. I returned to college. I didn't really get a good job until I was 32 years old. And with that eclectic resume came multiple deferments, a forebearance, and a whole lot of interest.
So much interest that the original balance of the loans has almost tripled.
That's not to say I didn't make payments, though. I made a lot of payments. Over $90,000 worth of payments. Just for comparison, the house I bought in 2004 was only $70,000. That's right - I paid more than the balance of my mortgage to my student loan, and it's still not paid off.
Worst game of Monopoly ever. I pass go? I give THEM $200.
I've been faithfully paying for my student loans for years now, and the balance is still over $100,000. The payments that I make are almost entirely for interest. The hole that I've dug keeps getting deeper, right?
And everything seemed to get even more hopeless.
The FFELP program ended in 2010, due in part to the 2008 Great Recession3. Basically, the government ended the ability for private lenders to offer government backed loans. Eventually, Sallie Mae transferred our loan (along with millions of others) to the control of Navient, which is the same loan shark, just with a different name. Basically, my federally backed loan became a private loan overnight.
What this did was, effectively ruin any chance that we could have had to qualify for Public Service Loan Forgiveness, a program begun in 2007. If you worked for a non-profit, you could qualify for forgiveness of you loan balance after 120 qualifying payments. So 10 years of payments on time, and whatever is left can be forgiven. As long as you stay employed at a nonprofit.
My wife works at a hospital, and has worked at this particular hospital for almost twenty years. I have worked for a non-profit academic institution for over ten years. Basically, PSLF was made for us. And yet, our type of loan disqualifies us.
I absolutely hate the victim mentality. It removes all sense of personal responsibility, placing the blame solely on circumstance or other entities out of our own control. If you've known anyone like that, you know that they are mostly miserable people who can never own up to their own mistakes.
Me? I've owned up to my mistakes and my ignorance. For a long time, I thought to myself, it's not fair to forgive anyone's student loan debt; I'm paying mine off, and so should they. Right? But I am a victim of a predatory system that took advantage of my ignorance; do we blame the shark attack victim or do we blame the shark?
I haven't changed that much, and while I'm not a huge fan of the Biden Executive Order for Student Loan Forgiveness, having been through what I've been through, I don't begrudge anyone getting some kind of relief. However, as I was thinking about it, I couldn't help but wonder if there's a large number of student loan borrowers that are going to qualify for forgiveness, who may have taken out their loans after we were all aware that we were in a crisis.
The average college graduate leaves school with about $30,000 in student loan debt. And that's the average - that means there are several graduates with far more than that, and others with far less. How many of those graduates graduated between 2013 and 2021? If this site is to be believed, it could be upwards of 32 Million people. All of those people, most of which graduated with debt, went into that debt with the full knowledge that we were in the throes of a student debt crisis.
I can't be the only one still in college debt after twenty years, who went into debt because of ignorance, watching students who had far more knowledge than I did do the same exact thing. They knew what they were getting into.
And yet, because they have the right kind of loans, they're going to get a significant amount of that debt forgiven, while people like me are left holding the bag.
And that student debt forgiveness has to come from somewhere else, right? That has to mean higher taxes. So not only will I still be forced to pay for my student loans, I will have to pay higher taxes in some form to cover for the millions of dollars being forgiven by the government.
I know this sounds like I'm a bitter old man yelling at the cloud. But it's not easy watching a bunch of people join you at a bottom of a well, only to see them be thrown a rope while you're stuck in the same place. Is it jealousy? Sure. I completely own up to that fact.
When the forgiveness plan was announced, FFELP loans were initially going to be included. The wording on the website was something along the lines of "we're working on a solution, so sit tight.". No more than a month later, and it was announced that FFELP loans would not be included, thanks to a lawsuit brought forward by a number of Republican dominated states, including Missouri, where MOHELA, a loan servicer that rivals the size of Navient, is located.4
I wasn't surprised.
I'm used to that kind of disappointment.
After looking at the numbers, I had to reach out to Navient - just to let them know about how upset I was. After spending only a few minutes on hold - props to them, by the way - I was connected to a service agent in India. I explained my situation. She tried to offer me options, all of which I had tried before, and she just wasn't listening. Eventually, I got so frustrated, I asked to speak with a supervisor.
I had hoped that the supervisor would be someone in the United States, mostly because I doubt service agents in India know about the plight over here. And honestly, the plight in most cities in India is far, far, far worse than any plight here in the US. But sadly, the supervisor was also from India.
I explained my situation, the supervisor was very nice, but I was tired of being overtly kind. I asked her, flat out, if she thought that me paying almost a quarter of a million dollars for a loan that was only a little over $50,000 was moral. She towed the line (not surprisingly), and said that it's moral because of the contract that I signed.
I think I banged my head on the desk when she said that.
Then, she offered me ... hope?
"There was recently a bill passed that would allow you to split your consolidation loans so you can qualify for FFELP."
I didn't believe her. I've been neck deep in Student Loan hysteria for a while now, you would think I would have heard about something like that. I asked her to tell me what the bill was called. I googled it, and discovered that yes, she was correct.5
Passed on the 11th of October this year, the Joint Consolidation Separation Act "allows two borrowers, who had previously received a joint consolidation loan for their federal student loan debt, to submit a joint application to the Department of Education to sever their consolidated loan into two separate loans."
This is a huge win. Is there light at the end of this long, student loan tunnel? Is it not a train? Given my experience, I have every right to be skeptical.
Since I discovered this, both my wife and I have submitted our applications for PSLF, as well as a reconsideration request, which will guarantee that we are in the system before October 31st, when the temporary expansion of PSLF ends. This feels like the last appeal before a death sentence.
And I'm hoping for a pardon.
Seriously, why haven't you ordered it yet? I can obviously use the money.
https://lendedu.com/blog/ffelp-loans/
https://www.npr.org/2022/09/29/1125923528/biden-student-loans-debt-cancellation-ffel-perkins
https://www.congress.gov/bill/117th-congress/senate-bill/1098#:~:text=Public%20Law%20No%3A%20117%2D200,(10%2F11%2F2022)&text=This%20act%20allows%20two%20borrowers,loan%20into%20two%20separate%20loans.